Potential TikTok Buyers Look At Options Despite Chinese Regulations

Prospective buyers of video-sharing service TikTok want to see ways to quickly acquire the app from parent ByteDance, with one option being buying the U.S. operations without key software, Reuters reports.

Other options include asking China's approval to pass TikTok's algorithm on to whichever company ends up acquiring it, licensing the algorithm from ByteDance and trying to get a transition period in which a U.S. national security panel would oversee the deal.

The idea is to make sure the video-sharing app, which has only grown in popularity during the pandemic, isn't made unavailable to thousands of U.S. users. A spokesperson for the app said it is "loved by 100 million Americans because it’s a home for entertainment, self-expression, and connection."

"We’re committed to continuing to bring joy to families and meaningful careers to those who create on our platform for many years to come," the spokesperson said, according to Reuters.

A recent update from Beijing makes restrictions on the sale of technology like that which TikTok uses to recommend videos to users, which is seen as an integral part of the app. The move has raised doubt over whether a deal with U.S. companies like Microsoft or Oracle would even be accepted. Walmart has also recently thrown its hat in the ring.

That's where the options for how to get around the new restrictions come from. The center of the debate is the fact that TikTok needs the aforementioned recommendation tech to function properly. If sold without that technology, the buyer would have to come up with a new one on its own.

Or, there could be ways of negotiating with China or ByteDance itself to get the algorithm, though both options have political dangers, Reuters writes, with trade tensions with China still at play and the Committee on Foreign Investment in the United States (CFIUS) wanting ByteDance to give up any connection to TikTok in the U.S.

ByteDance is currently in conversation with prospective buyers like the aforementioned tech companies ahead of the proposed Sept. 20 ban. The ban comes from national security concerns raised by the Trump administration. It has been challenged in court, but the ban so far will be in effect if no purchase deal is reached within the next few weeks.

Get our hottest stories delivered to your inbox.

Sign up for the PYMNTS.com Newsletter to get updates on top stories and viral hits.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.